Bad projections for Tesla: what to expect from its shares

This week is decisive for investors interested in the Magnificent Seven. In these next few days, four of them will reveal their performances for the first quarter of 2024. Among these prominent technology companies is tesla (NASDAQ:TSLA), which will present its results this Tuesday, April 23 before the market opens.

The electric vehicle maker is struggling to recover. Its value seems to show signs of recovery in the pre-opening after a negative start to the week and a 14% drop last week. Over the course of April, the company has seen a 16% decline in its stock market value, while in March it posted a 12% loss.

Before the decisive moment for Elon Musk’s company, the shares rise slightly 0.3% after registering a fall of -3.4% in the last session. The actions of Tesla can’t find a floor and they already accumulate a red of 33% in the last six months and 13.9% in the last year.

Tesla: what is behind the fall

Tesla has endured strong selling in the first quarter, as the electric vehicle maker struggles with growth bottlenecks amid the fierce competition from Chinese rivals and a decline in consumer demand.

Price cuts implemented in the second half of 2023 have noticeably compressed its profit margin, along with a marked slowdown in revenue growth due to weakened consumer demand.

Tesla reported disappointing delivery figure for the first quartertotaling 368,810, representing a decrease of 8.5% compared to the same quarter last year and a sequential drop of 20%. Production also experienced a slowdown, declining 12.5% ​​from the previous quarter to 433,371 units. Tesla attributed this slowdown to two main factors: the temporary closure of the German factory following a power outage caused by an arson attack in early March and disruptions to shipments due to Houthi militia attacks.

In the last quarter of 2023, Tesla’s total revenue only increased by one 3% compared to the previous year, as its car sales barely increased, 1% annually. Operating margin stood at 8.2%, almost half of the 16% in the fourth quarter of 2022.

Tesla’s net income doubled, thanks to a one-time non-cash tax benefit provision of $5.9 billion. But excluding that amount, its earnings per share fell about 39% year over year to $0.71. Musk also provided weak guidance and said volumetric growth could be noticeably lower by 2024.

Tesla: what to expect from its shares

And as he explains Gaston Lentiniinvestment advisor Ambit, looking at the other side of the coin and taking into account that the markets are at maximums, the essential thing “is prudence” in positions. The strategist explains that indices such as the S&P 500 and the Nasdaq 100 have already broken their 50-day moving averages and are looking for support at the 100-day average. }

In addition, the so-called “magnificent 7”, the large technology companies that are about to present their results, pThey seem to be looking for an excuse to correct these prices. For example, Tesla has lost 40% of its market value since the beginning of the year, while Nvidia fell 10% in the session on Friday, April 19 alone, indicates the advisor.

Lentini recalls that, according to the latest Bank of America report, the profits of these seven companies are expected to moderate, while the results of the other 493 companies in the S&P 500 are expected to improve, in line with what we have been reflecting on since 2023.

For its part, Emilse Cordobadirector of Bell Stock Exchange responds to this media’s query that, “the balance sheet season always carries an even greater risk of volatility,” especially when the market is correcting with an extremely delicate international context and with inflation in the northern country that does not give way according to as expected and with a certain rigidity.

Córdoba explains that for the market to be revitalized and find renewed reasons for momentum, “we should find very positive data on lower inflation,” which is unexpected at this time. Or, perhaps, a decrease in international conflicts and political tensions, also unexpected, that allows oil demand and prices to decompress.

Regarding technology, the analyst maintains that there are announcements of price reductions to increase sales, there are decisions to improve sales.

“For those who wish to close or reduce positions in SPY, QQQ or technology stocks, an alternative could be to buy the DIA ETF of industrial companies, the EEM of emerging countries or even the IWM of 2000 small cap companies,” recommends Lentini. However, if the goal is simply to hedge and protect profits, Perhaps it is prudent to stay liquid, invest in a mutual fund (CIF) or bond that yields 4% annually, and wait for a guilt-free moment.